Executive Summary

A major shakeout in the Indian mobile market is inevitable

India continues to be one of the fastest growing major telecom markets in the world. It is also one of the largest. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. The Indian government has been proactive in its efforts to transform India into a global telecommunication hub.

A strong increase in the telecom subscribers base has necessitated network expansion covering a wider area, thereby creating a need for significant investment in telecom infrastructure. However the fixed line market in India remains highly underdeveloped due to the dominance of the mobile segment. Further, the number of fixed telephone lines is slowly declining as the mobile segment continues to expand.

India’s fixed broadband market remains highly under-developed due to the dominance of the mobile platform and in turn by the uptake of mobile broadband. Fixed broadband penetration is expected to grow at a moderate rate over the next five years to 2022 from a very small base.

The digital economy will help the country align to its goals of expanding the wider Indian economy as well as enhancing jobs. Sectors such as communications, including telecoms, IT services, eCommerce, FinTech and electronics manufacturing, are growing at a good pace.

In 2017 India was the fastest growing eCommerce market globally however India will take more than 10 years to reach the level of the US and China markets in online retail.

There are several trends in the Indian online education segment that are contributing to the growth opportunities ahead. These include a continuous need for working professionals to learn new skills as well as the emergence of technologies such as big data and artificial intelligence that are enabling online education vendors to design customized content.

Video will remain the main driver for online content consumption. Increased uptake of VOD and catch-up TV, short format and original local video content along with high 4G data speeds will drive mobile data consumption.

India’s mobile market dominates the local telecom sector with its large subscriber base and revenue numbers, as well as the huge capital investment by operators. It has continued to be a highly competitive market in which a large number of providers have been battling to increase market share.

India’s mobile market has experienced very strong growth over the last five years. Market penetration is expected to reach over 90% by 2022.

Rather than a focus only on growth in subscribers the market is shifting to value-added. The roll-out of 4G / LTE services is driving significant shift to mobile data services across the country.

Market competition is intensifying in the mobile sector. Significant market consolidation amongst the mobile operators was underway in 2016 and 2017:

There was a very significant drop in ARPU during 2016-17 due to the entry of Jio into the mobile market. The subsequent price war has been intensifying in the mobile sector. A shake-out of the Indian mobile market is inevitable.

Mobile broadband penetration has grown strongly in India over the past few years, driven by a strong and growing mobile subscriber base. Going forward, the adoption of mobile broadband is expected to grow strongly as constraints in India around availability of network, ecosystem and affordability are addressed.

Key developments:

The emergence of an affluent middle class is triggering demand for mobile broadband.

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